One of the most useful rules in the history of economics is called Stein’s Law. Named after Nixon’s chairman of the Counsel of Economic Advisors, Herbert Stein, the rule says “Trends that can’t continue forever, won’t.”

That may sound too simplistic to be of much use, but the fact is, humans are bad at trend spotting. We have a tendency to see ongoing trends and extrapolate out forever. If something bad happens, we often assume things will just keep getting worse. If people have a run of good luck, they tend to think they’ve figured it all out and will keep winning forever.
There are a lot ofpredictionsaboutcloud computingfor the coming year. 2013 stands to be a pivotal year in the growth of cloud computing as the dominant computing platform. That’s not to say there won’t be some bumps—especially as new competitors to Amazon’s dominant service come on line. Expect pricing disruptions and some expensive failures as new players enter the scene. But if we step back and take a Herbert Steinian view, there are some obvious trends that can no longer continue, and a few more that are set to break open.Prediction 1: Cloud Discovery becomes a primary concern in eDiscovery, including discovery of social media content. (see Nextpoint’s guide topreparing for social media discovery) Because more data lives entirely on cloud servers, corporations continue to embrace social media, and companies continue to move to cloud-based email and Google Docs, eDiscovery will increasingly be a cloud-based affair.Prediction 2: Organizations will wake up and realize that many of their applications and data are cloud-based… and then see that it’s a good thing. According toIDC Research, by 2015 one of every seven dollars spent on software, server, and storage offerings will be spent on cloud-based services, including web-based email systems. The majority of organizations will have started moving some functionality to the cloud. Slow moving organizations will continue experimenting with moving certain components (ticketing systems, forums, etc) outside of their own firewall, while others dive into the deep end, putting entire systems in the cloud, where the cost, reliability, and availability offer competitive advantages to early adopters.Prediction 3: Sadly, people will continue to freak out and worry that cloud data somehow violates international data privacy laws and confuses jurisdictions… even though it’s a bogus concern. The fact is,data rarely crosses international borders in cloud computing. You can specify in which region your provider should keep your data. The fact is, email backup providers, data hosting services, cloud applications, and other Internet services certainly take advantage of multiple data centers for their services, but crossing international borders is not common.
Prediction 4: This is the year that people realize the term “private cloud” is overhyped. An application is either cloud based or not. As we’ve always maintained, locally installed data on portable computers and devices is inherently the riskiest possible way to store data. (We’re not the only ones saying this—just Google “Private Cloud is… ” and “Private Cloud is a Lie” appears as the first suggestion.) If you’re using a “private cloud,” then you simply are not getting the advantages true cloud providers offer in allocating resources efficiently and offering the most/best security provisioning and lowest cost possible.Prediction 5: Lawyers realize that there’s actually ananswer for managing large volumes of data in litigation—the cloud. The volume of data expansion in litigation is directly the result of the Internet. Building out your own data center means unnecessary costs—buying servers, maintaining them, networking the system, depreciating, replacing, troubleshooting, and adding staff in the IT department. Everyone, even traditional tech vendors, are coming to understand that no one is willing to invest long term in technology that Amazon has commoditized. Just like no one buys electrical generators for their infrastructure, there is no need or reason to build out a data center.Prediction 6: You are no longer tied to your desktop, thanks to the cloud. There was a time when a lot of companies pretended BYOD was just a fad, and that employees should remain tied to applications and data stored on their desktop in a cubicle. Thanks to the cloud, applications and data are device independent, and the workforce is free to work wherever and however they need.Prediction 7: The expected cloud computing disaster will not happen. There have been, and will certainly be failures in cloud data centers. But one of the advantages of cloud computing is that providers have many, massive data centers for backup and redundancy. Your cloud provider can backup data and applications across these data centers to ensure you can access your data even if a natural disaster or Internet outage cripples one location. Cloud computing detractors imagine that a massive cloud computing outage is likely to scare people away from cloud applications. There will certainly be outages, but cloud applications are most likely more reliable than any locally installed software. I mean, locally installed software has never failed, right? No one has ever lost work because of an software crash in the office, right? Is our sarcasm coming through?Prediction 8: Cloud computing will no longer be an exotic feature in software marketing. Today, being a cloud-based application is a differentiator, something that makes one software service different or more interesting than locally-installed software. By 2013, cloud applications will be so common that software providers will have to compete on the quality of their cloud service—just being cloud-based will not be enough.
Like all of our predictions above, we think this trend is so obvious that it’s hard think it won’t come true quickly. But the bottom line is, locally installed software is a trend that cannot continue, so it won’t.